Is the Realtor who is raffling off her soon-to-be-foreclosed-upon spec house violating State raffle laws? An initial telephone call to the Secretary of State's office resulted in erroneous information that only lotteries and bingo games are controlled by the State of Illinois. In spite of direct and repeated questions about raffles, I was assured that Illinois had no state law related to raffles.
Later I learned from a very helpful person at the McHenry County Government Center that Illinois does, indeed, have a State law related to raffles. If you are interested in reading it, visit the Illinois government website at www.illinois.gov; click on Government on the left side; find Illinois Compiled Statutes under Services & Information and click on that. Scroll down to Chapter 230 Gaming, and then click on 230 ILCS 15/ for Raffles. It’s all there.
Raffles can be conducted by specific types of organizations (individuals are not "organizations"), including charities. It would be a great stretch of the imagination to see how an individual could raffle off a house to pay off construction costs. The real estate broker's website, www.advantage-realty.com, early on Friday morning displayed an ad for the raffle and included wording that the "net proceeds" would be distributed to a school. At mid-day the ad was gone from its website. At 5:10PM it’s back.
The website ad states that the raffle is for the benefit of Harrison School Parent Teacher Oganization. The seller hopes that the net proceeds will be sufficient to build a track at the school. From reading the ad, one would believe that the “net proceeds” from the sale of a $245,000 house (October 2007 appraisal value) would certainly pay for a track.
The state law defines "net proceeds" as “the gross receipts … less reasonable sums expended for prizes, local license fees and other reasonable operating expenses incurred as a result of operating a raffle.” It does not state that construction costs of a home or mortgage loans would be a “reasonable sum”.
Far down in the fine print is a very brief reference that the Grand Prize Winner gets the house "subject only to the claims, if any, relating to the state of title to the parcel". And how much are the "claims"? A bundle. That's why the house is almost in foreclosure.
At the McHenry County level, the request for a permit was turned down, because a charity was not involved. The raffle is being deemed held in McHenry, because the City of McHenry does not control raffles. However, McHenry does expect any raffle to comply with State laws.
Is this really a raffle for the benefit of a school? Or is it a raffle to bail out the owners and, if anything is left over, the school gets it. Creativity is certainly involved and, if it’s legal, it’s commendable.
But – is it legal?
© 2008 GUS PHILPOTT
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3 comments:
Having been involved with home raffles for a major non-profit charity for over ten years I can tell you that Illinois has the most complex charitable gaming laws of any state where these raffles are legal.
The owners of the home could, very well, be taking advantage of a loophole; however, it is the school that has to be licensed for the raffle, maintain records and subscribe to the laws which pertain to charitable gaming. If sales fall short of the "selling price" of the home, who will make up the difference? Are the owners willing to eat it?
It is challenging to sell that many raffle tickets and most unfavorable for a charity to spend 70, 80, or 90% of the revenue on prizes.
This is tricky ground.
fred, thanks for your insight and information! The raffle rules are posted on the real estate firm's website, and it's clear that the property owner is conducting the raffle. You're so right that it's tricky ground. Again, many thanks for posting your comment!
Fred,
Are you still involved in this work?
Could you please contact me...thanks.
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